As the title suggests, through luck or some skill and good podcasts, im up 70% by buying and selling a few times and then settled on 5 well know companies, all are up 8% to 70!%.
I feel this is kinda ludicrous in the midst of a global pandemic, and often I get the vibe to just cash in the profits and call it “a good eve at the casino”. What stops me is that obviously, where do I then put the cash that would make sense? Bonds, accounts, ISAs barely beat inflation, let alone the 70% gain above. Likewise my mortgage rate is so low, it makes no sense to speed up payments, and that my only “loan”. The total isn’t enough to say, put a deposit on a second property… so what to do? Anyone in a similar situation?
The answer is in your question. There is no good place to put money so folks are putting it in the market which is driving price higher.
Also, prices in March were super low due to Covid and given the change in many industries has resulted in spectacular gains.
Things are frothy without a doubt but when that will change is anybody’s guess.
Too good to be true? I would say “Too good to be repeatable”. In a typical year it’s not easy to find extremely trendy stocks like Tesla, Zoom or GGP, and the average US market performs around +8/+10%.
None so far managed to achieve an average annual return of 70%. Zero reported cases in the history. Warren Buffett in his best years performed around +45% at year. In his whole career he did an average annual return of +20%.
In conclusion, it’s too good but it’s true, at least for 2020. Be prepared for a not-so-good 2021.
Maybe sell your holdings, keeping the profit and reinvesting the original amounts you put down.
The broader market may suffer from the January blues in the new year, so I’d make hay while you have the opportunity.
Good advice, but timing is the big one, I see two outcomes… Either the market corrects in successive selloffs in Jan to Mar, as you’re suggesting… in which case i can wait and then sell when it starts unfolding and then watch for when it bottoms… Or… and this is where my inexperience worries me, what if the correction comes suddenly and instantly? I’m thinking like the shares across the board fall 40/50% in a day - the mother of all crashes… Is this likely?
What are the 5 companies? your question can’t be answered without knowing
I don’t think it’ll be an almighty crash, but there could be a slight pullback, especially in sectors like automotive and tech.
Around now is usually when institutions and big investors are trimming their positions and reevaluating their portfolios ahead of the next year. So might be wise to follow suit and sell some of the holdings, if not the entirety.
And as @jbowen said, it also depends on the companies. Worth reading up on potential headwinds and tailwinds etc.
I’ve always found investing more stressful when I was thinking about selling at the market top. It’s been a lot easier for me to just hold a portion of my portfolio as cash for any pullbacks.
Unless your investment goals are short term don’t let your gain weigh on your mind. You’ve made 70% and this might fall to 50% but there’s a good chance you’ll be up higher in the medium term
Timing can only work in addition with leverage.
Without leverage, only the simple moving average at 300-360 days showed some result in timing the market.
My wife had a couple of free shares + some shares of chocolate brand that she bought because “it’s her favourite” (they are closing stores and loosing money). She is up 100% something since March.
This is rather hilarious.
Figure out how much you’re willing to give back if the market corrects and put in a stop loss.
Much easier said than done… Its been proven time and time again that time in the market > timing of the market
I also like the saying ‘markets will be irrational longer than you can stay sane’. Timing is everything but being 1st is no guarantee of anything either
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